THE  RAILROAD  RATE  BILL. 


SPEECH 


OF 


HON.  SAMUEL  W.  McCALL, 

OF  MASSACHUSETTS, 

Jr 

IN  THE 


HOUSE  OF  REPRESENTATIVES, 


Friday,  February  2,  1906. 


WASHINGTON. 

1906. 


6512 


- 


- 


. 


I 


SPEECH 

OF 

HON.  SAMUEL  W.  McCALL. 


The  House  being  in  the  Committee  of  the  Whole  House  on  the  state 
of  the  Union  and  having  under  consideration  the  bill  (H.  R.  12987)  to 
amend  an  act  entitled  “An  act  to  regulate  commerce,”  approved  Feb- 
ruary 4,  1887,  and  all  acts  amendatory  thereof,  and  to  enlarge  the 
powers  of  the  Interstate  Commerce  Commission — 

Mr.  McCALL  said: 

Mr.  Chairman  : If  the  pending  bill  made  an  effective  re- 
sponse to  public  opinion  upon  the  railroad  question,  it  would 
deal  in  the  most  comprehensive  and  the  most  particular  terms 
with  rebates  or  favored  rates,  whether  given  directly  or  in 
any  of  the  indirect  forms  in  which  they  have  been  extended. 
A secret  rate  lower  than  the  rate  which  is  published  for 
all  or  valuable  concessions  given  shippers,  under  whatever 
subterfuge,  are  obnoxious  to  the  law,  which  contemplates  not 
merely  a just  and  reasonable  but  an  equal  rate.  What  is  de- 
manded to  meet  the  real  evil,  and  what  was  demanded  by  public 
opinion  until  its  attention  was  diverted  to  an  utterly  irrational 
and  haphazard  remedy,  is  legislation  making  clear  beyond  ques- 
tion the  right  of  every  man  to  equal  treatment  and  giving 
him  the  amplest  remedy  for  every  violation  of  his  right.  The 
private  car,  refrigerator  car,  the  industrial  switch,  receiving  a 
part  of  the  through  rate  as  if  it  were  an  independent  line,  every 
instrument  of  favoritism  and  injustice,  had  justly  received  pub- 
lic condemnation.  These  evils  were  dealt  with  in  general  terms 
by  the  amendment  known  as  the  “ Elkins  Act.”  But  that  act 
needed  to  be  broadened ; it  needed  to  be  made  more  specific,  so 
that  it  should  prohibit  unequal  treatment  under  whatever  guise, 
and  then  it  needed  to  be  enforced,  not  merely  by  a fine,  but  in 
clear  cases  of  evasion  by  imprisonment  both  for  the  giver  and 
the  receiver  of  the  secret  rate.  If  a law  had  been  passed  upon 
these  lines  one  year  ago,  every  demand  of  what  can  justly  be 
called  “ public  sentiment  ” would  have  been  satisfied.  The  Re- 
publican national  convention  in  1904  made  no  declaration  what- 
ever regarding  railroads.  The  Democratic  convention  declared 
against  rebates  and  discrimination.  Rebates  and  discrimina- 
tions in  all  their  protean  forms  were  the  real  evil.  The  Presi- 
dent in  his  annual  message  declared  against  them,  but  he  pro- 
mulgated as  a remedy  that  the  Commission  be  given  authority 
to  fix  railroad  rates  whenever  a complaint  should  be  made. 

The  leading  authority  upon  railroad  economics  in  the  British 
Empire  said,  not  long  ago,  of  the  bill  passed  by  the  House  last 
winter  in  line  with  the  President’s  recommendation,  that  it 
would  have  done  no  more  to  stop  rebates  than  would  the  reen- 
actment of  Magna  Charta.  I endeavored  to  point  out  at  that 
time  upon  this  floor  that  there  was  no  possible  relation  between 
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the  giving  of  rebates  and  the  fixing  of  rates  by  a commission, 
and  that  a railroad  could  as  easily  give  a criminal  rebate  from 
a rate  fixed  by  a commission  as  from  one  fixed  by  itself.  And 
the  advocates  of  this  legislation  have  refrained  from  penetrat- 
ing the  awful  mystery  and  have  discreetly  permitted  the  rela- 
tion between  rebates  and  commission  rate  making  to  remain  a 
secret  until  this  day. 

The  issue  of  political  rate  making  in  the  Congress  of  the 
United  States  is  not  the  result  of  any  evolution  or  of  any 
expression  of  public  opinion,  but  it  is  a mere  fungus  growth. 
It  sprung  up  in  a night.  It  grew  out  of  the  Presidential  non 
sequitur,  and  I am  very  willing  to  concede  that  a non  sequitur  is 
something  in  which  a busy  man  may  sometimes  indulge.  If 
teachers  of  logic  are  looking  for  a perfect  example  of  a non 
sequitur  for  their  classes,  I commend  them  to  the  statement  of 
the  evils  and  the  statement  of  the  remedy  contained  in  the 
President’s  annual  message  to  Congress  in  December,  1904. 

And  at  once  political  rate  fixing  became  a burning  issue — I 
mean  in  Congress,  but  not  before  the  people,  for  there  has  been 
no  election  since  it  was  so  suddenly  and  so  illogically  sprung 
upon  the  country.  Mr.  Bryan,  the  once  idolized  leader  of  his 
party,  for  a,  time  dethroned,  but  summoned  back  again  by  the 
overwhelming  exodus  of  Silver  Democrats  at  the  last  election, 
Mr.  Bryan,  who  might  have  brought  action  for  infringement, 
generously  hailed  political  rate  making  as  a decisive  step 
toward  his  cherished  dogma,  Government  ownership,  and  he 
fixed  upon  it  the  stamp  of  his  emphatic  approbation.  He  looked 
upon  it  as  his  own  child,  and  not  long  ago,  as  he  was  starting 
around  the  globe,  in  almost  the  last  words  he  uttered  upon 
American  soil,  with  a paternal  solicitude  he  commended  the 
bantling  to  the  tender  care  of  the  President. 

The  Democratic  party  followed  its  leader  and  took  up  the 
cause  of  rate  making  with  enthusiasm  and  unanimity.  As  for 
the  Republicans,  rate  fixing  had  been  made  party  policy  by  our 
just  elected  President,  and,  logic  or  no  logic,  we  were  expected 
to  get  in  line.  This  is  the  genesis  of  the  public  opinion  upon 
this  point.  If  any  political  platform  adopted  prior  to  the 
President’s  message  by  either  of  the  great  parties  suggested  any 
form  of  rate  making  by  the  National  Government  as  a remedy 
for  discrimination  or  for  any  other  purpose,  I trust  some  gentle- 
man will  cite  it. 

So  far  as  favoritism  is  concerned,  in  every  one  of  its  forms 
I am  opposed  to  it.  I would  have  you  enact  against  it  the 
most  drastic  law  which  ingenuity  could  devise.  And  I would 
have  the  right  of  every  man  to  a just,  reasonable,  and  equal 
rate  taken  to  the  courts  at  the  expense  of  the  Government,  in 
the  first  instance,  and  ultimately  of  the  railroads,  if  they  were 
held  to  be  in  the  wrong,  under  every  effective  species  of  remedy, 
taken  to  that  forum  where  Anglo-Saxon  freedom  has  won  its 
noblest  triumphs.  For  my  part  I prefer  the  natural  and  benefi- 
cent liberty  of  the  courts  to  the  cast-iron  regulations  of  a com- 
mission. I would  encourage  proceedings  such  as  that  in  Scot- 
land, which,  for  a differential  given  in  good  faith,  took  from  a 
railroad  company  in  damages  and  costs  about  $700,000.  But 
in  this  measure  we  are  neglecting  to  follow  the  vital  line  and 
paltering  with  the  highest  interests  of  the  country.  I am  for 
every  feature  of  your  bill  aimed  at  discrimination,  and  I would 
favor  far  more  stringent  features ; but  your  rate  fixing,  which 
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is  the  substantial  part  of  your  bill,  is  economically  as  vicious  as 
it  is  illogical  and  I propose  to  submit  to  you  some  reasons  why 
I can  not  give  my  support  to  a measure  which  I fear  you  have 
already  almost  unanimously  determined  to  enact. 

And  I shall  at  the  outset  dispose  of  two  or  three  preliminary 
propositions.  It  is  claimed  that  it  was  intended  to  confer  the 
rate-making  power  when  the  interstate  act  was  passed,  and  that 
the  Commission  for  ten  years  exercised  it.  The  facts  are  that 
the  framers  of  the  act  declared  in  the  debate  that  it  did  not 
confer  the  rate-making  power ; the  courts  as  early  as  1890 
decided  that  the  power  did  not  exist ; there  was  no  general  be- 
lief that  it  had  been  conferred,  and  although  the  Commission 
assumed  to  pass  on  the  relative  reasonableness  of  rates  in  a 
few  cases,  when  it  attempted  to  exercise  the  power  in  a really 
important  case,  its  authority  was  challenged,  and  the  Supreme 
Court  finally  decided  that  the  act  did  not  confer  the  power  of 
fixing  a rate. 

Of  the  same  character  as  the  misapprehension  which  I have 
referred  to  is  the  pretense  that  the  rate-fixing  power  in  this 
bill  is  altogether  exceptional  in  its  character — not  for  every-day 
use,  but  likely  only  to  be  exercised  upon  rare  and  great  occa- 
sions. Gentlemen  simply  run  away  from  their  proposition,  and 
it  is  little  cause  for  wonder.  Their  bill  confers  the  power  to 
revise  all  the  rates  in  the  country  and  to  substitute  other  rates 
for  them  upon  the  happening  of  a mere  formality.  In  the  maxi- 
mum-rate case  thousands  of  rates  were  involved,  and  there  is 
the  testimony  of  a high  officer  of  one  of  the  railroads  concerned 
that  the  reduction  ordered  by  the  Commission  in  that  case  would 
have  cost  the  railroads  $3,000,000  a year.  It  would  have  meant 
bankruptcy  to  some  of  the  railroads.  But  if  you  need  a decision 
of  a court  upon  so  plain  a proposition,  read  what  the  Supreme 
Court  said  when  it  passed  upon  the  asserted  power  which  is 
similar  to  that  granted  in  your  bill : 

If — 

Said  the  court,  in  167  United  States,  510 — 

the  power  existed  as  is  claimed  there  would  be  no  escape  from  the  con- 
clusion that  it  would  he  within  the  discretion  of  the  Commission,  of  its 
own  motion,  to  suggest  that  all  the  interstate  rates  on  all  roads  of  the 
country  were  unjust  and  unreasonable,  notify  the  several  roads  of  such 
opinion,  direct  a hearing,  and  upon  such  hearing  make  one  general 
order  reaching  to  every  road  and  covering  every  rate. 

It  is  clear  that  the  present  bill  gives  the  Commission,  upon 
the  mere  formality  of  somebody’s  filing  a complaint,  power  to 
set  aside  great  groups  of  rates  and  to  substitute  other  rates  for 
them.  The  pretense  that  it  contemplates  only  the  challenging 
here  and  there  of  a single  rate  demonstrates  clearly  that  the 
advocates  of  this  measure  do  not  understand  it  or  that  they  do 
not  dare  avow  its  purpose.  On  the  theory  that  a mere  isolated 
rate  is  to  be  tried  here  and  there  your  bill  amounts  to  nothing 
from  your  own  standpoint,  for,  as  was  said  by  a railroad  presi- 
dent the  other  day,  it  would  take  hundreds  of  years  for  your 
court  to  sit  in  judgment  upon  each  of  the  billion  or  more  rates 
in  the  country.  Indeed,  the  new  rates  would  increase  faster 
than  your  Commission  could  decide  them.  I shall  therefore 
assume  that  this  measure  is  a rate-fixing  scheme  of  the  most 
sweeping  character. 

The  fundamental  question,  then,  involved  is,  Do  we  want 
rate  making  by  a Government  board?  The  burden  of  proof 
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rests  upon  the  man  who  contends  that  such  a system  should  be 
substituted  for  the  system  at  present  in  force.  It  is  upon  the 
advocates  of  this  bill  to  show  that  we  should  set  aside  the 
American  system  of  fixing  freight  rates  which  has  given  us 
rates  hardly  half  as  high  as  are  paid  by  the  other  great  coun- 
tries of  the  world,  although  our  railroads  pay  their  labor  twice 
the  wages  paid  in  the  other  countries.  The  burden  of  proof,  I 
say,  rests  heavily  upon  those  who  would  radically  substitute 
for  our  present  system  the  foreign  system  of  fixing  rates  by  the 
Government.  Magnificent  platitudes  about  eminent  domain  and 
our  duty  to  exercise  the  great  commerce  powers  of  the  Constitu- 
tion will  not  sustain  the  burden.  Give  us  a reason  why  we 
should  discard  a system  which  has  been  a success  for  a system 
which  has  been  a failure. 

The  experiment  has  been  thoroughly  tried.  We  have  the  re- 
sult of  the  experience  of  other  nations  and  of  our  own.  You 
will  find  the  experience  of  the  great  countries  of  the  world  ad- 
mirably set  forth  in  a book  by  Professor  Meyer  upon  Govern- 
ment Regulation  of  Rates.  If  Professor  Meyer  is  wrong  in 
any  of  his  important  statements,  I have  not  observed  that  those 
who  differ  with  him  have  pointed  out  his  errors.  And  my  friend 
from  Pennsylvania  [Mr.  Sibley],  in  his  masterly  speech  yester- 
day, left  little  to  be  said  upon  this  point. 

Take  first  the  experience  of  Germany,  which  for  more  than 
a quarter  of  a century  has  had  rates  fixed  by  the  Government. 
In  the  case  of  Germany,  however,  the  Government  owns  the  rail- 
roads and  has  all  the  rights  which  go  with  the  proprietor  and 
also  with  the  state.  The  state  is  pimply  managing  its  own 
property  and  manfully  paying  the  bills.  In  that  country  the 
rates  were  made  upon  a mileage  basis,  and  this  difficulty  was  at 
once  encountered.  If  the  rates  were  high  enough  per  mile  so 
that  traffic  hauled  for  a short  distance  would  yield  a net  revenue, 
they  would  be  so  high  for  a long  haul  as  to  be  practically  pro- 
hibitive of  long-distance  traffic ; and  on  the  other  hand,  if  the 
mileage  rate  were  so  low  that  merchandize  could  be  carried  a 
great  distance  profitably,  the  short-distance  traffic  would  be 
carried  at  a loss.  The  German  Government  made  repeated  at- 
tempts to  give  concessions  from  the  mileage  rate  in  favor  of 
long-distance  traffic.  For  instance,  it  made  the  so-called  “ taper- 
ing rate,”  that  would  permit  the  wheat  of  eastern  Germany  to 
find  its  way  by  rail  to  the  great  manufacturing  centers  along 
the  Rhine.  Saxony,  in  the  center  of  Germany,  also  produces 
wheat,  and  the  Saxon  millers  and  landowners  contended  that 
they  had  a “ natural  right  ” to  the  market  in  their  neighborhood, 
and  that  it  was  a discrimination  for  the  Government  to  bring 
the  wheat  of  eastern  Germany  at  an  exceptionally  low  rate 
to  western  Germany  in  competition  with  the  wheat  and  flour 
of  Saxony.  The  German  Government  is  a reasonably  autocratic 
Government,  and  yet,  resist  as  it  would,  it  was  finally  compelled 
to  yield  and  to  reestablish  the  mileage  rate  upon  the  eastern 
wheat ; and  the  German  minister  declared  that  125  miles  was 
the  maximum  distance  at  which  wheat  could  be  carried  by 
rail  in  Germany  for  domestic  consumption.  The  same  minister 
said  that  for  most  purposes  of  trade  eastern  Germany  and  the 
Rhine  country  were  farther  apart  than  Germany  and  New 
York  or  Germany  and  Buenos  Ayres. 

The  same  thing  was  illustrated  in  the  raising  of  sugar.  At 
the  time  of  the  sugar  campaign  there  is  a great  demand  for 
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labor  in  the  sugar-producing  sections,  and  the  state  railroads 
would  sell  excursion  tickets  to  the  laborer  for  less  than  the 
regular  rates ; but  the  landowners  of  other  portions  of  Ger- 
many claimed  that  these  special  rates  had  the  result  of  induc- 
ing the  labor,  which  they  would  naturally  employ,  to  leave  them 
unless  they  paid  higher  wages — in  effect  these  landowners 
claimed  that  the  excursion  tickets  operated  to  take  away  from 
them  their  natural  rights— and  although  it  was  admitted  that 
the  laborer  secured  higher  wages  and  these  wages  resulted  in 
a better  standard  of  living  and  that  the  travel  which  the  work- 
ingmen got  broadened  to  an  extent  their  intellectual  horizon, 
yet  the  Government  finally  yielded  and  stopped  the  practice  of 
selling  excursion  tickets  and  restored  the  hard  and  rigid  state 
rate. 

This  insistence  upon  the  right  to  a market  which  proximity 
gives,  this  resistence  to  discrimination  and  favoritism  shown  by 
hauling  at  a low  rate  the  merchandize  of  a community  at  a great 
distance  so  that  it  may  compete  in  the  same  market  with  the  near- 
by community,  is  also  seen  in  the  manufacture  of  iron  and  steel. 
And  the  effect  of  the  recognition  of  the  natural-right  theory,  the 
mileage  theory,  in  Germany,  resisted  in  vain  by  that  Government, 
has  been  undeniably  toward  establishing  a zone  system  of  com- 
merce, toward  preventing  Germany  from  becoming  a common 
market,  and  to  break  it  up  into  little  principalities  for  the  pur- 
poses of  trade.  And  it  is  most  striking  and  significant  that  the 
German  Government,  in  order  to  escape  from  the  consequences 
following  its  own  exercise  of  the  rate-making  power  upon  rail- 
roads, expended  millions  of  dollars  upon  canals  connecting  its 
rivers  so  that  traffic  might  be  conducted  by  private  parties  be- 
tween remote  parts  of  the  Empire. 

Waterways  are  to-day  the  vital  currents  of  German  trade, 
although  wherever  railroads  are  permitted  to  compete  with 
water  they  secure  the  bulk  of  the  traffic.  This  is  proven  by  the 
vastly  greater  tonnage  of  export  coal  carried  by  railroad  than  by 
the  Rhine.  Traffic  upon  the  railroads  along  the  Elbe  greatly  ex- 
ceeded the  traffic  upon  that  river,  but  after  the  Government  as- 
sumed control  the  situation  was  reversed.  The  German  Gov- 
ernment therefore  has  expended  vast  sums  of  money  in  order  to 
confer  upon  private  parties  the  power  to  fix  under  the  operation 
of  natural  laws  the  rates  for  long-distance  traffic.  There  could 
not  be  a more  striking  example  of  the  evils  of  government  rate 
fixing  than  is  afforded  by  the  experience  of  that  great  and  highly 
civilized  country. 

In  France  the  rates  are  made  by  the  Government,  not  by  a 
political  commission  of  seven  men,  as  the  bill  before  the  House 
would  result  ultimately  in  establishing  for  this  country,  but  by 
a bureau  of  thirty-three  highly  trained  experts  with  a great 
staff  of  assistants,  although  B^rance  has  barely  a tenth  of  the 
mileage  of  the  United  States.  The  Government  of  France  has 
a very  large  financial  investment  in  its  railroads  and,  as  in  Ger- 
many, it  exercises  to  quite  an  extent  the  functions  of  proprietor 
as  well  as  the  regulating  power  of  the  nation  when  it  fixes  rates. 
You  will  find  a similar  condition  in  France  to  that  which  exists 
in  Germany.  The  natural  waterways,  supplemented  by  canals 
built  by  the  state,  are  the  props  which  chiefly  support  industrial 
France.  And  you  will  find,  as  I have  said,  in  both  France  and 
Germany  freight  rates  at  least  twdce  on  the  average  what  they 
are  in  America,  although  the  great  item  in  the  operation  of  the 
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railroad,  the  wages  paid  the  workingmen,  are  on  a scale  less  than 
half  what  the  American  railroads  pay. 

The  French  experts  find  it  necessary  to  deviate  from  their 
ordinary  rates,  and  in  a single  year  80  per  cent  of  the  traffic  was 
carried  at  speoial  rates.  What  would  be  the  effect  upon  public 
opinion  in  this  country  if  our  national  railroad  Commission 
should  yield  to  fair  economic  demands  and  permit,  if  they  could 
do  so  under  this  bill,  such  a deviation  from  the  regular  rates? 

In  England  the  railroads  are  not  owned  by  the  nation,  and 
the  Government,  with  the  conservatism  toward  private  prop- 
erty which  characterizes  the  British  people,  permits  great  lati- 
tude to  the  railroads,  and  they  approach  in  cheapness  of  serv- 
» ice  and  efficiency  the  railroads  of  the  United  States,  although 
their  rate  is  much  higher  and  their  average  wage  is  much 
lower  than  in  this  country.  In  England,  however,  the  Govern- 
ment established  parliamentary  rates  which,  as  Mr.  Ackworth 
says,  were  obsolete  almost  before  they  were  enacted.  They 
were  maximum  rates  such  as  you  propose  to  have  created  under 
this  bill.  The  tendency  has  been  for  the  railroads  to  adhere  to 
the  maximum  rate  or  to  approach  it  closely.  The  establishment 
of  rates  materially  lower  would  be  a confession  that  the  maxi- 
mum rates  were  unreasonably  high  and  might  lead  to  action  by 
the  Government  reducing  the  maximum  rate.  In  all  of  these 
countries  we  see  a rigidity  to  the  rates  established  by  the  Gov- 
ernment, and  we  see,  too,  the  lack  of  constant  supervision  of 
detail,  due  to  the  enormous  task  of  revising  the  great  mass  of 
rates,  and  a lack  of  responsiveness  to  the  temporary  conditions 
of  business  which  an  army  of  traffic  agents,  scattered  over  the 
country  at  the  sources  of  freight  supply,  would  keep  in  touch 
with  and  fully  recognize  in  the  making  of  rates. 

The  Governments  of  Austria-Hungary  and  Russia  absolutely 
fix  their  railroad  rates,  and  substantially  the  same  results  are 
witnessed  there  as  in  Germany,  only  in  a more  exaggerated 
form.  I have  not  alluded  to  Canada  because  its  rate  system 
has  been  in  operation  only  a year,  and  so  short  an  experience 
would  be  of  little  value.  But  even  in  that  short  time  the  com- 
mission have  begun  to  readjust  rates  from  the  standpoint  of 
distance  and  to  operate  as  a protective  tariff,  and  they  have 
succeeded  in  classifying  beans,  which  are  carried  in  small 
quantities,  with  wheat  which  moves  in  train  loads. 

The  experience  of  Australia,  where  the  railroads  are  con- 
trolled by  the  government,  is  valuable.  Her  railroads  are  every- 
thing that  the  people  of  this  country  would  not  desire.  Their 
operation  throws  a striking  light  upon  one  of  the  favorite 
theories  of  our  own  Commission — a theory  that  is  entirely 
natural  and  would  have  been  effective  had  the  Supreme  Court 
not  intervened,  and  which  would  be  effective  under  this  bill. 

Our  railroads  have  made  certain  points,  scattered  all  over 
the  country,  what  are  termed  “ basing  points,”  and  have  given 
them  a special  rate  slightly  better  than  that  to  the  communi- 
ties immediately  about  them.  This  system  results  in  build- 
ing up  centers  of  trade  and  distribution  at  different  points  in 
the  country,  and  it  results  also  in  giving  the  localities  around 
these  centers  lower  freight  rates,  notwithstanding  the  claim 
that  they  are  discriminated  against,  because  it  enables  the 
railroads  to  consolidate  their  freight  and  haul  it  from  the  sea- 
board or  other  sources  of  supply  to  the  center  of  distribution 
at  greatly  less  expense,  in  perhaps  2,000-ton  train  loads.  The 
6512 


9 


Australian  system  is  hostile  to  the  basing  point  because  it 
adopts  to  an  extent  a mileage  rate,  as  our  Commission  would 
be  compelled  to  do,  and  what  is  the  result?  A road  is  built, 
say  from  Melbourne  100  miles  into  the  interior,  and  at  its 
terminus  a town  springs  up  which  becomes  a center  for  supply- 
ing the  country  about  it  and  the  still  farther  interior.  But 
the  road  is  afterwards  extended,  and  the  manufacturer  or  the 
jobber  in  the  once  flourishing  interior  town  is  obviously  at  a 
disadvantage  with  his  competitor  at  Melbourne,  because  he  has 
a freight  rate  from  Melbourne  and  another  freight  rate  when 
he  ships  his  goods  to  the  buyer.  He  must  either  retire  from 
business  or  go  to  Melbourne,  and  the  result  is  that  the  commer- 
cial and  banking  and  great  industrial  business  of  Australia  is 
done  at  the  four  or  five  ocean  termini  of  the  railroads.  The 
freight  trains  from  the  seaboard  centers  peddle  out  small 
parcels  of  freight  at  a great  number  of  points,  and  such  distri- 
bution is  enormously  expensive. 

The  destruction  of  “ basing  points,”  so  called,  in  the  United 
States,  would  take  awmy  a great  part  of  the  business  of 
Atlanta,  Memphis,  and  Kansas  City,  and  scores  of  other  inte- 
rior centers,  and  would  transfer  it  to  New  York  and  Chicago 
and  St.  Louis.  If  you  think  our  industry  and  trade  should  be 
centralized  in  a few  great  cities  instead  of  being  diffused 
throughout  the  States  of  the  Union,  then  you  will  support  this 
bill,  because,  if  it  permits  the  adjustment  of  relative  rates,  it  is 
an  admirable  instrument  to  accomplish  that  purpose. 

Then  first-class  passenger  fares  are  lower  in  this  country  than 
in  Europe,  but  if  one  travels  third  or  fourth  class  he  may 
sometimes  travel  more  cheaply  abroad  than  first-class  here,  and 
in  Germany  one  may  save  by  traveling  fourth-class  in  a box 
car  on  a slow  train.  But  if  one  traveled  on  a corresponding 
scale  of  luxury  in  the  United  States  he  would  bill  himself 
through  and  go  as  freight. 

Now,  what  is  the  American  system  which,  without  any  con- 
sideration worthy  of  a great  economic  subject  and  upon  mere 
generalities,  you  are  airily  proposing  in  this  bill  to  set  aside 
for  the  policy  which  I have  been  describing?  In  this  country 
the  interstate  rates  ha,ve  been  made  by  the  railroads  with 
practically  no  check,  so  far  as  governmental  interference  is  con- 
cerned. It  has  been  the  prime  policy  of  the  railroads  to  de- 
velop a vast  continental  traffic  drawn  at  low  rates  and  between 
the  most  remote  sections  of  the  country.  It  has  been  to  make 
of  America  a common  market.  The  “ natural-right  ” theory  has 
more  than  once  been  involved.  The  low  long-distance  rates 
brought  the  agricultural  products  of  the  West  in  competition 
with  the  farms  of  New  York,  New  England,  and  Pennsylvania, 
in  markets  which,  on  the  •“  natural-right  ” theory,  belonged  to 
the  farmers  of  the  last-named  States.  And  while  your  lands 
have  gone  up  enormously  in  value  the  farms  of  New  England 
and  the  East  have  greatly  decreased  in  value.  Yet  on  the  whole 
the  East  has  benefited  because  it  concentrated  its  energies  upon 
manufactures  and  trade  and  the  railroads  took  its  products  to 
the  West  at  low  rates  in  the  cars  which  bore  your  produce  East, 
and  which  would  otherwise  have  returned  empty. 

If  we  had  had  since  1865  a railroad  commission  with  the 
power  in  this  bill  to  fix  railroad  rates  it  is  a moral  certainty 
that  many  now  civilized  portions  of  the  West  would  be  un- 
settled regions,  and  as  a necessary  consequence  your  great 
6512 


10  • 


cities  would  not  be  the  magnificent  affairs  they  are  to-day. 
The  East,  relatively  powerful,  would  have  resisted  the  invasion 
upon  its  natural  markets  by  the  low  long-distance  rates,  with  the 
inevitable  result  that  has  been  witnessed  in  Germany.  There 
would  have  been  a distance  tariff,  and  a distance  tariff  would 
have  held  back  the  settlement  of  the  far  western  lands  for 
generations. 

The  Interstate  Commerce  Commission  has  more  than  once 
affirmed  the  “ natural-right  ” theory,  and  if  it  is  to  pass  upon 
the  conflicting  claims  of  sections  it  can  not  escape  from  that 
theory.  The  elevator  and  dock  owners  and  great  merchants 
of  New  York  protested  against  a rate  from  the  West  to  New 
York  on  wheat  destined  for  export  lower  than  the  rate  to  that 
city  on  wheat  for  internal  consumption.  The  low  rate  for  the 
export  wheat  was  directly  for  the  benefit  of  the  farmer,  but  it 
took  from  the  men  of  New  York  certain  profits  that  they 
claimed  the  “ natural  right  ” to  have,  because  their  city  was  the 
gateway  to  the  Continent,  and  the  Interstate  Commerce  Com- 
mission ordered  that  the  rate  on  the  wheat  destined  for  export 
should  be  the  same  as  that  for  New  York.  The  question  in- 
volved was  of  vital  importance  to  the  farmer,  and  it  is  sig- 
nificant that  the  railroads  were  fighting  his  battle,  which  the 
Commission  decided  against  him  in  effect  upon  the  natural-right 
theory.  The  Supreme  Court  supported  the  railroads  and  over- 
turned the  decision  of  the  Commission. 

The  striking  feature  in  the  American  railroad  system,  then, 
has  been  the  remarkable  development  of  the  low  long-distance 
rate  which  has  made  of  the  country  a common  market  and  has 
stimulated  trade  between  its  most  remote  parts.  The  Ameri- 
can railroad  rates,  in  the  mass,  are  not  the  arbitrary  fiat  rates 
such  as  would  be  ground  out  by  a governmental  machine,  but, 
in  a sense,  they  are  self-made  rates,  and  result  from  the  free 
play  of  commercial  and  industrial  forces.  Even  such  a differ- 
ential as  that  established  in  favor  of  Baltimore  and  Philadel- 
phia against  New  York  and  Boston,  which  would  at  first  sight 
appear  artificial,  was  the  result  of  one  of  the  fiercest  and  most 
expensive  commercial  wars  ever  waged  upon  this  continent, 
and  when  a few  months  ago  the  Interstate  Commission  was 
called  upon  to  arbitrate,  under  an  agreement  between  the 
cities,  as  to  this  differential  it  reached  the  very  conclusion  that 
was  the  outcome  of  that  war. 

The  enormous  expansion  following  the  civil  war  was  suc- 
ceeded by  the  severe  financial  crisis  of  1873,  and  for  a half 
dozen  years  the  country  was  in  the  gloom  of  a profound  depres- 
sion. There  were  armies  of  unemployed  in  the  factory  cities 
of  the  East,  vast  numbers  of  immigrants  seeking  employment 
who  had  poured  into  the  country  during  the  years  of  its  appar- 
ent prosperity.  Our  industrial  collapse  would  have  been  even 
more  serious  and  profound  had  it  not  been  for  the  policy  of  our 
railroads.  New  lines  had  been  ppened  up  through  rich  areas, 
inhabited  only  by  the  buffalo  and  the  wolf.  But  in  spite  of  the 
fact  that  the  price  of  wheat  had  fallen  30  per  cent,  the  railroads 
established  such  low  rates  to  the  seaboard  that  the  lands  were 
quickly  put  under  the  plow,  and  a great  portion  of  the  surplus 
population  of  the  East  was  transferred  to  the  farms  of  the 
West.  Nearly  the  entire  wheat  crop  of  some  of  the  States  be- 
yond the  Mississippi  found  a market  on  the  other  side  of  the 
Atlantic.  Mr.  Edward  Atkinson,  as  exact  an  economic  author- 
6512 


11 


ity  as  ever  lived  in  America,  estimated  that  the  saving  upon  the 
transportation  of  wheat  from  the  Mississippi  to  the  Atlantic 
during  the  fourteen  years  succeeding  1873  amounted  to  33  cents 
on  every  bushel.  Suppose  we  had  had  a governmental  commis- 
sion at  that  time,  when  the  East  was  politically  the  strongest 
section  and  held  the  dominant  power.  Is  it  not  almost  a cer- 
tainty that  they  would  have  listened  to  the  protest  of  the  latter 
section  against  the  disturbance  of  their  domestic  market  in  those 
depressed  times,  and  that  those  now  mighty  and  stable  Com- 
monwealths that  lie  beyond  the  Mississippi  would  have  waited 
for  that  great  development  which  the  railroads  forced  upon 
them?  Why,  those  great  States  are  the  very  daughters  of  the 
economic  American  system  of  making  freight  rates.  They  would 
not  have  come  into  being  under  the  system  established  by  this 
bill,  and  yet  they  are  now  blindly  clasping  hands  to  strangle 
the  mother  who  bore  them.  The  working  of  natural  laws  and 
the  unhampered  genius  of  the  enterprising  American  railroad 
men  proved  during  that  great  crisis  the  salvation  of  the  country. 

The  rate  making  of  our  railroads  is  done  by  an  army  of  tens 
of  thousands  of  men,  picketing  every  part  of  the  country.  Often 
cars  have  to  be  returned  empty  over  a long  route.  A rate  that 
would  pay  the  difference  between  hauling  a car  loaded  and 
hauling  it  empty  in  such  a case  would  pay  the  railroad.  The 
traffic  agent  will  often  discover  a commodity  of  low  value  in 
one  part  of  the  country  that  can  be  used  in  another  part,  and 
which,  unless  carried  at  a very  low  freight  charge,  can  not  be 
carried  at  all.  The  transportation  will  pay  the  owner  of  the 
commodity  something ; it  will  also  pay  the  railroad,  and  the 
commodity  will  be  used  to  advantage  by  a distant  consumer. 
That  traffic  would  be  at  once  set  in  motion.  The  nicest  curve, 
the  strain  of  a swift  train  upon  a bridge,  the  building  of  tun- 
nels, can  present  no  more  technical  questions  to  the  engineer 
than  are  often  faced  by  the  thousands  of  traffic  men  who,  in 
their  eager  search  for  tonnage,  must  consider  rival  markets  and 
the  relative  demands  of  localities. 

' The  flexibility  of  this  system,  where  rates  are  fixed  by  eco- 
nomic laws,  is  infinitely  preferable  to  the  wooden  system  estab- 
lished by  this  bill,  where,  after  a rate  has  been  determined,  you 
walk  off  and  leave  it  a fixed  and  immutable  fact  for  three  years, 
unless  a decree  can  be  obtained  from  an  overworked  Commis- 
sion changing  its  decision  and  establishing  a new  rate.  And  by 
the  time  the  authority  would  be  conferred  the  necessity  for  a 
change  of  rate  would  probably  have  passed  away. 

The  editor  of  the  London  Statist,  perhaps  the  leading  financial 
organ  of  the  British  Empire,  in  writing  recently  of  a typical 
report — that  of  the  American  Great  Northern  Railroad — said  the 
results  shown  in  that  report  would  fill  the  shippers  of  Great 
Britain  with  envy,  in  which  country  he  declares  that,  notwith- 
standing the  density  of  traffic,  the  people  under  tariffs  directed 
by  government  have  had  very  little  reduction  in  a quarter  of  a 
century. 

Gentlemen  talk  of  throttled  competition.  You  must  remember 
that  the  most  effective  competition  is  not  between  two  or  more 
parallel  railroads  serving  the  same  points,  but  between  railroads 
connecting  different  sources  of  supply  with  the  same  market. 
The  competition  between  markets  has  done  more  to  reduce 
freight  rates  permanently  in  this  country  than  the  competition 
between  parallel  roads,  including  the  injurious  and  spasmodic 
6512 


12 


“ cutting  ” in  rate  wars.  The  rates  from  Chicago  to  New  York 
compete  with  the  rates  from  Chicago  to  New  Orleans  and,  it  may 
be,  with  the  rates  from  Chicago  to  the  Pacific.  The  lines  from 
St.  Paul  to  New  York  or  Boston  run  in  opposition  to  the  steam- 
ships plying  between  South  America  and  London  or  with  the 
railroads  that  carry  the  wheat  of  interior  Russia  to  the  sea. 
The  primary  instinct  of  self-preservation  will  inspire  railroads 
to  protect  the  markets  of  the  territory  they  serve.  Every  in- 
terest of  private  property  impels  them  not  merely  to  preserve, 
but  to  build  up  their  communities.  But  here  you  propose  to  have 
a governmental  agency  step  in  and  set  aside  the  primary  edicts 
of  commerce  and  trade.  It  may  be  for  this  agency  to  say  not 
that  the  railroad  shall  serve  its  own  interests  by  serving  the 
interests  of  its  territory,  but  to  say  that  the  natural  advan- 
tages of  its  community  are  not  equal  to  those  of  a competing 
community  a thousand  miles  distant  served  by  another  railroad, 
and  that  the  latter  community  should  have  a relatively  better 
rate.  And  it  will  doubtless  be  claimed  that  it  has  the  power,  in 
order  to  prevent  what  may  be  called  discrimination  between 
communities  to  readjust  the  rates. 

Suppose  the  farmers  of  Vermont  should  contend  before  the 
Commission  that  they  were  only  200  miles  from  Boston,  and 
that  it  was  a destruction  of  their  natural  market  for  the  agri- 
cultural products  of  the  West  to  be  brought  1,000  miles  into 
Boston  as  cheaply  as  their  own  produce,  and  that  their  rate 
to  Boston  should  be  relatively  reduced.  What  will  your  Gov- 
ernment commission  say  to  that?  Or,  suppose  some  iron-manu- 
facturing locality  in  Pennsylvania  should  assert  that  the  low 
rates  on  coal  and  pig  iron  to  Worcester,  in  New  England,  was 
a discrimination  against  the  rights  of  the  former  locality,  what 
will  your  railroad  commission  say  to  that?  It  is  inevitable  thaj: 
sooner  or  later,  struggle  as  you  may,  you  will  repeat  the  ex- 
perience of  Germany  and  have  a distance  tariff.  Mr.  Ack- 
worth,  the  leading  English  authority,  speaking  fifteen  years 
ago  of  the  effect  of  low  rates  to  bring  distant  markets  together 
and  of  the  inevitable  tendency  of  government  rates  t"  become 
distance  rates,  said  if  anyone  “ wishes  to  put  an  end  to  this  state 
of  things  and  to  return  as  near  as  may  be  to  the  age  of  gold, 
when  the  Middlesex  farmers  had  in  the  London  cattle  market 
the  full  advantage  of  their  geographical  position,  he  can  not  do 
better  than  devote  his  energies  to  securing  a government  con- 
trol of  railway  rates.”  There  is  no  reason  why  you  gentlemen 
from  the  South  and  West  should  not  have  the  mileage  basis 
if  you  want  it,  but  I shall  do  what  I can — I fear  much  too 
little — to  make  you  see  just  what  you  are  voting  for.  If  you 
want  sooner  or  later  to  put  an  effective  brake  upon  our  progress, 
you  will  find  no  better  way  to  do  it  than  to  vote  for  the  policy 
upon  which  the  pending  bill  embarks  the  country. 

‘ Then,  the  port-preference  clause  of  the  Constitution  would 
prohibit  the  Commission  from  giving  one  port  an  arbitrary  dif- 
ferential rate  better  than  another  port.  Do  awTay  with  these 
differentials  and  you  strike  a mortal  wound  at  competition. 

I have  not  understood  that  a popular  government  was  adapted 
to  carrying  on  to  advantage,  even  on  its  own  account,  a busi- 
ness ordinarily  conducted  by  private  enterprise.  From  the  time 
when  the  Pilgrims  saved  themselves  from  starvation  only  by 
abandoning  the  practice  of  raising  corn  in  common  and  permit- 
ting each  family  to  raise  its  own  corn  to  the  time  when  Massa- 
6312 


13 


chusetts  built  the  Hoosac  Tunnel  for  about  thirty  millions,  which 
it  afterwards  sold  for  ten  millions,  or  when  Illinois  completely 
bankrupted  itself  in  building  railroads  and  canals  and  conduct- 
ing the  banking  business,  the  experiments  of  government  on 
this  continent  in  running  business  enterprises  have  uniformly 
been  attended  with  great  waste,  if  not  uniformly  with  failure. 
But  what  may  not  be  expected  when  a governmental  agency 
manages  business  for  which  private  individuals  pay  the  bills? 
The  pending  measure  not  merely  confers  upon  a commission 
the  power  of  establishing  a rate,  but  it  makes  them  in  important 
particulars  general  managers  of  the  railroads. 

It  confers  upon  them  authority  to  prescribe  just  and  fair 
and  reasonable  regulations  or  practices  in  respect  to  transpor- 
tation. It  attempts  to  give  them  both  judicial  and  legislative 
powers,  making  thein  now  a little  congress  and  now  a little 
court,  for  the  Supreme  Court  has  held  that  it  is  for  the  ju- 
diciary to  say  what  is  a reasonable  rate  and  for  the  legislature 
to  prescribe  what  a future  rate  shall  be.  The  latter  is  the 
least  of  the  legislative  powers  conferred.  The  Commission  may 
by  an  order  destroy  the  prosperity  of  a section  of  the  country 
and  may,  in  effect,  impose  restrictions  upon  commerce  between 
States  which  it  was  the  prime  purpose  of  the  Constitution  to 
prevent.  With  the  Government  fixing  rates,  constituencies 
would  inevitably  carry  their  grievances  into  politics.  I believe 
it  will  be  contended  that  your  bill  in  substance  confers  the 
power  to  impose  a rate  for  one  section  in  its  relation  to  the  rate 
of  another  section.  You  will  therefore  have  the  different  parts 
of  the  country  knocking  at  the  door  of  the  National  Government 
for  favors,  and  intrigue  and  politics  will  rekindle  the  sectional 
jealousies  that  have  now  been  happily  allayed.  This  policy 
will  again  plant  the  seeds  of  discord  in  the  hearts  of  the 
American  people. 

The  railroads  are  not  even  permitted  by  this  bill  to  give  ex- 
cursion rates  between  interstate  points  without  first  publishing 
a schedule  thirty  days  in  advance,  or  unless  the  Commission 
makes  a special  dispensation  or  a general  regulation  permitting 
it.  If  that  does  not  make  a legislature  of  the  Commission,  then 
the  hitherto  accepted  notions  of  the  function  of  legislation  will 
need  to  be  radically  revised.  The  “ Be  it  enacted  by  the  Phil- 
ippine Commission,”  which  gives  vitality  to  the  laws  of  a people 
who  are  neither  a citizen  nor  a foreign  people,  will  be  matched 
by  the  “ Be  it  enacted  by  the  Interstate  Commerce  Commission  ” 
in  laws  passed  for  the  government  of  the  people  of  the  United 
States.  If  the  making  of  railroad  rates  is  a legislative  func* 
tion  which  can  be  delegated  by  calling  it  administrative,  why 
may  we  not  in  a bill  originating  in  the  House  confer  upon  a 
commission  the  power  to  fix  tariff  rates? 

You  propose  to  confer  upon  a mere  human  agency  a practical 
task  that  would  be  superhuman.  It  is  made  their  duty  upor 
complaint  to  revise  any  and  all  the  thousand  millions  or  more 
freight  rates  in  the  country  and  an  untold  number  of  passengei 
rates.  In  addition  to  administrative  functions,  in  defiance  ol 
the  Constitution,  you  confer  upon  them,  as  I have  said,  judicial 
and  legislative  powers.  They  are  to  be  vested  with  author- 
ity over  a dozen  billions  of  property  and  nearly  a million  and 
a half  of  employees.  The  enormous  magnitude  of  the  task  is 
admitted,  but  there  Is  to  be  an  easy  solution  for  it  all. 

6512 


14 


We  are  to  have  a Commission  made  up  of  prodigies  and  paid 
splendid  salaries.  The  President,  at  Austin,  Tex.,  last  April, 
before  the  two  houses  of  the  Texas  legislature,  gave  his  notion — 
and  a lofty  one  it  was — of  the  character  of  the  men  who  should 
constitute  the  Commission.  “ They  should  not,”  he  said,  “ be 
swayed  by  any  influence  whatever — social,  political,  or  any 
other — to  show  improper  favoritism  to  the  railroads,”  and,  “ on 
the  other  hand,  if  the  rate  is  unjustly  attacked,  no  matter  if 
that  attack  has  behind  it  the  feeling  or  prejudice  of  99  per  cent 
of  the  people,”  they  will  stand  up  against  that  attack.  This  is 
a noble  ideal,  but  where  are  these  paragons  to  be  found?  Even 
far  higher  officers  than  commissioners  are  not  always  found  to 
be  unresponsive  to  public  sentiment.  The  President  has  un- 
doubtedly selected  for  the  commissions  he  has  already  filled 
the  men  whom  he  believed  the  best  adapted  to  the  work. 
Nearly  all  the  members  of  the  present  Commerce  Commission 
were  appointed  by  him,  and  yet  the  Administration  bill  intro- 
duced in  the  House  a year  ago  proposed  to  abolish  this  Com- 
mission absolutely.  The  first  Canal  Commission  were  paid 
magnificent  salaries,  and  yet  they  were  unceremoniously  deposed 
from  office  in  scarcely  a year  after  the  President  had  appointed 
them.  And  the  present  Canal  Commission,  even  with  the  aid  of 
the  $10,000  press  agent,  does  not  seem  to  command  the  admiring 
approval  of  the  country.  [Applause.]  The  President  will  be 
compelled  to  discover  a new  field  if  he  finds  the  remarkable  men 
that  he  undoubtedly  desires  to  appoint.  But,  even  if  he  should 
find  them,  he  can  not  endow  them  with  immortality,  and  some 
day  another  President  will  appoint  their  successors,  provided 
the  Board  should  not  be  abolished  beforehand,  and  these  suc- 
cessors may  be  made  of  common  official  clay.  For  my  part,  I 
doubt  that  you  will  get  a better  Commission  than  the  one  you 
now  have.  I have  known  the  New  England  member  from  boy- 
hood. He  is  a brilliant  lawyer,  and  one  whom  it  is  not  possible 
to  corrupt.  The  chairman  is  an  able  and  fair-minded  man.  The 
other  members  command  the  respect  of  the  people  who  know 
them. 

But  the  difficulty  will  be  not  so  much  with  the  men  as  with 
the  system.  They  will  be  unable  to  perform  those  impossible 
duties,  and  then  their  work  is  near  the  political  line,  across 
which  they  will  inevitably  drift,  and,  as  has  been  attempted 
already  in  some  of  the  most  enlightened  States  in  the  Union, 
some  day,  acting  under  pressure  or  under  the  spur  of  ambition 
or  of  a desire  to  “ do  things,”  some  great  schedule  is  liable  to 
be  broken  into  atoms,  and  the  commerce  and  industry  of  one  sec- 
tion may  be  arbitrarily  transferred  to  another.  I believe  that 
it  is  vastly  better  for  the  interests  of  the  country,  so  long  as 
rates  can  be  fixed  under  the  operation  of  economic  laws,  to  re- 
ject the  artificial  method  proposed  by  this  bill,  which  makes  of 
a commission  a sort  of  Providence  with  power  to  create  one 
city  and  destroj^  another. 

It  is  an  extraordinary  power — the  power  to  fix  railroad  rates. 
It  might  be  so  exercised  as  to  act  as  a tariff  between  States ; to 
strike  down  trade  between  remote  sections  of  the  country ; to 
dissipate  the  foreign  and  domestic  commerce  of  New  York ; 
to  cause  the  great  city  of  Chicago,  like  many  another  exhalation, 
to  sink  back  again  in  the  marshes  from  which  she  sprang.  And 
yet  gentlemen  contend  that  this  power  is  so  unimportant  that 
we  can  call  it  “ administrative  ” and  delegate  it. 

6512 


15 


As  representing  some  of  the  people  of  New  England  upon  this 
floor,  I say  to  you  that  I believe  they  do  not  care  to  offer  up 
supplications  to  any  statutory  deity  at  Washington  for  the 
right  to  continue  to  exist,  but  that  they  will  bravely  take  their 
chances  with  those  economic  forces  which,  with  a disastrous 
exception,  have  hitherto  ruled.  Having  seen  her  commerce 
swept  from  the  seas  by  the  action  of  the  national  Government 
in  imposing  an  utterly  useless  and  unstatesmanlike  embargo, 
New  England  can  more  safely  reckon  with  the  constant  or 
slowly  changing  economic  forces  than  to  have  her  domestic 
commerce  subject  to  the  “ theories  of  progress  ” of  a commis- 
sion, possibly  of  martinets  and  almost  certainly  of  politicians. 
The  prosperity  of  her  people  is  vital  to  the  existence  of  the 
great  railroads  which  now  serve  them,  but  if  that  should  be 
entirely  disregarded,  if  the  railroads  should  attempt  to  destroy 
themselves  by  destroying  the  communities  which  support  them, 
the  people  of  New  England  still  have  the  courts,  and  if  you 
will  perfect  their  remedies  the  dangers  that  they  will  be  under 
in  even  the  extreme  case  I have  supposed  will  be  less  than  the 
dangers  you  are  creating  by  the  policy  of  this  bill. 

Economic  writers  divide  American  railroad  commissions  into 
two  classes — the  strong  and  the  weak.  The  strong  ones  are 
those  bristling  with  formidable  legal  powers  and  the  weak  ones 
have  commonly  powers  of  investigating  and  reporting  facts 
and  making  recommendations.  Mr.  Charles  Francis  Adams, 
an  admirable  authority,  says  the  strong  commission  means  “ the 
constable  ” and  the  weak  one  “ public  opinion.”  The  difference 
in  the  effect  upon  its  possessor  of  the  authority  to  advise  and 
the  authority  to  command  is  strikingly  illustrated  by  the  so- 
called  “ strong  ” and  “ weak  ” commissions.  The  strong  com- 
missions, as  a rule,  are  in  antagonism  with  the  railroads  and 
often  also  with  the  courts  which  are  compelled  to  intervene  to 
set  aside  decrees  essentially  confiscatory.  The  weak  commis- 
sions, having  the  power  only  to  advise,  base  their  advice  upon 
rational  and  reasonable  grounds.  The  best  illustration  of  the 
weak  commission  is  that  of  Massachusetts.  Its  power  regard- 
ing rates  is  purely  advisory.  When  a complaint  is  made,  it  in- 
vestigates and  reports,  advising  the  rate  which  it  deems  rea- 
sonable, and  I believe  in  every  instance  in  the  history  of  the 
commission  its  advice  has  been  accepted  by  the  railroads.  I 
venture  to  say  that  the  Massachusetts  commission  has  done  as 
much  for  the  development  of  the  railroad  system  and  for  the 
protection  of  its  public  as  any  State  commission  in  the  Union. 

If  you  are  seeking  a model  for  a national  commission,  I do 
not  know  of  a better  model.  The  national  commission  has  been 
most  successful  in  those  cases  where  it  has  acted  somewhat 
upon  the  theory  upon  which  the  Massachusetts  commission  is 
constituted.  Over  90  per  cent  of  the  complaints  made  to  the  na- 
tional commission  have  through  its  influence  been  adjusted  be- 
tween the  railroads  and  the  complainants  to  the  satisfaction  of 
both  parties.  But  in  the  cases  in  which  the  Commission  has 
fulminated  decrees  as  to  rates  it  has  accomplished  very  little 
for  the  public  or  the  railroads.  Of  thirty-four  decisions  which 
have  been  carried  to  the  courts  it  has  been  overruled  in  thirty- 
two  cases  and  only  successful  in  two.  If  you  want  to  change  the 
rate-making  provisions  of  the  present  law,  permit  the  Commis- 
sion, as  now,  to  declare  a rate  to  be  unreasonable  and  then  let 
them,  as  in  Massachusetts,  suggest  the  rate  that  they  deem  rea- 
6512 


16 


sonable.  If  tlieir  suggestions  are  rational,  they  will  have  public 
opinion  behind  them  and  the  railroads  will  be  forced  to  com- 
ply ; but  arm  them,  as  you  do  in  this  bill,  with  the  terrors  of  the 
law,  with  the  power  to  command  railroads  to  make  a rate  or  to 
fix  a so-called  maximum  rate,  with  authority  to  promulgate 
little  statutes,  and  you  are  sure  to  breed  antagonism  between  the 
Commission  and  the  railroads.  Then  confer  upon  them  the 
powers  proposed  in  a bill  prepared  by  a very  able  member  of  the 
Senate,  against  every  species  of  favoritism,  let  them  proceed  in 
the  courts  in  the  interest  of  individuals  who  have  suffered  by 
unreasonable  rates  or  unfair  practices  of  railroads,  have  the  de- 
cision of  these  cases  expedited,  and  it  seems  to  me  you  will  have 
made  a much  better  solution  of  the  railroad  question  than  you 
afford  in  your  bill. 

Much  could  be  accomplished  by  the  equal  enforcement  of  the 
laws  already  upon  the  statute  books  if  those  who  enforce  our 
laws  are  possessed  by  the  unappeasable  rage  of  justice.  Sir,  I 
have  no  sympathy  with  that  vicious  sentiment  which  would 
prosecute  a man,  not  because  he  is  guilty,  but  because  he  is  rich, 
and  that  would  make  our  prosecuting  offices  the  refuge  of  every 
demagogue  and  mountebank.  But  great  as  is  our  country,  it  is 
not  and  it  never  will  be  great  enpugh  to  shelter  two  kinds  of  law, 
the  one  for  you  and  me,  for  the  general  mass  of  American  citi- 
zenship, and  the  other  for  some  executive  grand  duke. 

A railroad  rate  is  a fluctuating  thing  in  the  cost  of  its  pro- 
duction, and  from  an  economic  standpoint  no  law  can  fairly 
fix  a future  rate  which  does  not  fix  those  material  elements  upon 
which  the  rate  depends.  As  was  pertinently  asked  by  Mr. 
Benton,  an  able  lawyer  of  my  own  State,  if  the  State  fixes  the 
price  that  railroads  are  to  receive  for  transportation,  would  it 
fix  also  the  prices  that  go  into  the  making  of  the  cost  of  that 
transportation? 

Will  it  fix  the  price  of  coal  and  ties  and  iron,  the  wages  of 
labor,  and  those  other  varying  elements  of  the  cost  of  service, 
all  of  which  absorb  by  far  the  greater  part  of  the  rates  they 
receive?  What  prudent  man  would  care  to  conduct  a business 
with  the  Government  fixing  the  price  at  which  he  should  sell 
his  product  and  leave  him  subject  to  the  laws  of  supply  and 
demand  for  everything  he  was  compelled  to  buy?  A rate  that 
is  reasonable  to-day  may  be  unreasonable  to-morrow  simply 
from  the  standpoint  of  the  cost  of  production,  and,  under  the 
present  law,  what  is  a just  rate  can  always  be  determined  at 
any  given  time  by  a court  and  jury  whenever  an  individual 
claims  that  an  unreasonable  rate  has  been  exacted.  The  ques- 
tion of  unreasonableness  can  be  tested  in  the  courts.  The  juries 
will  not  hesitate  to  do  as  they  have  done  in  England,  and  the 
public  will  be  protected.  Is  that  not  far  more  rational  than  the 
method  you  propose  in  this  bill? 

Mr.  STEPHENS  of  Texas.  Will  the  gentleman  yield  for  a 
question? 

Mr.  McOALL.  If  I can  get  through  in  the  limited  time  which 
I have,  at  the  end  I shall  be  very  glad  to  yield  to  the  gentleman. 

I can  not  find  an  economic  authority  worthy  of  the  name  who, 
prior  to  one  year  ago,  supported  the  theory  of  Government- 
made  rates  for  this  country.  After  the  President  had  promul- 
gated the  notion  of  rate  making  as  a cure  for  rebates  and  dis- 
criminations, there  appeared  a crop  of  economists  whose  names 
had  previously  escaped  the  attention  of  the  country,  each  with 
6512 


IT 


a patent  nostrum  guaranteed  to  work  a cure  on  the  President’s 
plan.  It  was  the  heyday  of  the  economic  quack.  We  have 
even  had  it  proposed,  on  high  authority,  that  if  it  were  dis- 
covered that  one  of  many  competing  railroads,  say,  between 
Chicago  and  New  York,  had  given  low,  secret  rates,  those  rates 
should  immediately  be  declared  to  be  the  reasonable  rates 
although  they  would  be  forced  upon  the  competing  railroads, 
who  were  eifcirely  innocent,  and  might  be  made  bankrupt  by 
them.  That  is  a fair  illustration  of  some  of  the  economic 
theories  that  have  been  evolved  upon  this  question. 

It  is  said  that  the  sentiment  of  the  shippers  is  behind  this 
rate-making  proposition.  With  the  exception  of  isolated  indi- 
viduals, whatever  sentiment  has  been  expressed  in  favor  of 
this  policy  did  not  appear  until  it  was  proposed  fourteen  months 
ago  and  was  authoritatively  put  forth  as  the  remedy  for  the 
evils  of  discrimination  and  the  giving  of  rebates.  Even  then, 
few  complaints  were  made  that  the  rates  were  too  high,  but  that 
they  were  unequal,  and  on  the  assumption  that  the  proper 
remedy  for  that  inequality  was  in  the  fixing  of  rates  by  the 
Commission,  the  proposition  was  supported  by  business  organi- 
zations. But  the  more  the  plan  was  studied  the  less-  it  received 
the  approbation  of  the  business  men  of  the  country.  The  first 
serious  opposition  came  at  the  convention  of  shippers  called 
by  Mr.  Bacon,  the  promoter  of  this  movement.  The  organiza- 
tions in  that  convention  were  those  which  he  himself  had  selected 
and  the  most  important  of  them,  and  probably  the  majority  of 
them,  were  opposed  to  his  scheme  and  were  therefore  ruled  out 
of  the  convention.  It  is  said  that  those  protesting  delegations 
were  packed  by  the  railroads.  But  what  shall  be  said  of  the 
great  national  convention  of  the  boards  of  trade  of  the  country, 
the  most  representative  convention  of  business  men  that  is  held 
upon  this  continent?  This  convention,  held  in  the  city  of  Wash- 
ington during  the  last  month  and  only  a year  after  this  new 
gospel  had  been  preached,  adopted  a resolution  with  regard  to 
rate  fixing  where  the  proceeding  was  to  begin  with  the  courts 
and  end  with  them  and  was,  in  effect,  a most  emphatic  condem- 
nation of  this  policy. 

That  resolution  was  adopted  by  a vote  of  ten  to  one  of  the 
delegates  assembled.  And  let  me  say  to  Members  on  the  other 
side  of  the  House  that  this  rate-fixing  policy  found  no  more  un- 
compromising opponents  in  that  convention  than  were  found 
among  the  delegates  from  the  great  cities  of  the  South.  They 
saw  its  viciousness  not  merely  from  the  traditional  Democratic 
standpoint,  but  also  from  the  position  of  self-interest.  They 
saw  the  South  standing  exultant  upon  the  threshold  of  a bril- 
liant era  of  prosperity,  just  entering  upon  her  career  of  indus- 
trial glory,  and  that  the  railroads  will  do  for  her  what  they 
have  already  done  for  the  North  and  West  unless  the  capital 
which  would  naturally  be  invested  in  them  should  be  frightened 
aw^ay  by  this  populistic  hullabaloo  in  which  you  are  joining. 

Mr.  ADAMSON.  May  I interrupt  the  gentleman? 

The  CHAIRMAN.  Does  the  gentleman  from  Massachusetts 
yield  to  the  gentleman  from  Georgia? 

Mr.  McCALL.  Certainly. 

Mr.  ADAMSON.  I do  not  wish  to  injure  the  gentleman  by 
taking  his  time,  but  I will  endeavor  to  make  reparation.  I 
know  the  gentleman  desires  to  be  correct,  therefore  I desire  to 
make  a correction.  I understood  the  gentleman  a few  moments 
6512 2 


18 


ago  to  declare  that  under  this  law  excursions  could  not  be  per- 
mitted without  taking  time  in  going  before  the  Commission.  I 
wish  to  call  the  gentleman’s  attention  to  section  22  of  the  “ act 
to  regulate  commerce.”  It  makes  a provision  for  excursions  as 
well  as  for  governmental  and  charitable  purposes. 

Mr.  McCALL.  It  may  be  that  I am  mistaken,  but  I think  that 
it  is  provided  that  schedules  of  all  rates  and  fares  shall  be 
printed  thirty  days  before  they  are  put  in  force.  That  would 
operate  by  implication  to  change  the  existing  law. 

I willingly  agree  that  my  friend  has  studied  the  bill  more 
carefully  than  I have.  But  that  is  my  conclusion. 

Mr.  ADAMSON.  I do  not  think  there  was  any  intention  to 
alter  that  special  section. 

Mr.  BARTLETT  rose. 

The  CHAIRMAN.  Does  the  gentleman  from  Massachusetts 
[Mr.  McCall]  yield  to  the  gentleman  from  Georgia  [Mr. 
Bartlett] ? 

Mr.  BARTLETT.  May  I be  permitted  to  say  that  in  this  bill 
there  is  a distinct  provision  that  none  of  the  provisions  of  the 
act  of  1887,  unless  repealed  or  altered  by  this  bill?  The  saving 
clause  of  this  particular  bill  is  that  it  saves  to  the  Commission 
every  right  and  power  they  had  under  the  act  of  1887. 

Mr.  McCALL.  It  covers  that  particular  point  of  that  particu- 
lar subject  in  the  act  of  1887,  and  *what  the  gentleman  says 
upon  that  point  is  all  right. 

Mr.  BARTLETT.  We  do  not  cover  the  point. 

Mr.  McCALL.  I beg  the  gentleman’s  pardon.  I think  the 
bill  very  clearly  covers  the  point  of  supplying  the  schedules  for 
rates  for  a period  of  thirty  days  before  they  are  put  in  force. 

Mr.  BARTLETT.  That  is  the  act  of  1887  also. 

Mr.  McCALL.  Yes ; I may  be  mistaken,  but  I am  still  of  the 
opinion  strongly  in  my  reading  of  the  bill  that  I am  correct.  I 
thank  the  gentleman  for  calling  my  attention  to  the  point. 

It  is  contended  that  the  policy  of  national  rate  making  is 
necessary  in  order  to  avert  governmental  ownership.  Either 
governmental  ownership  is  an  evil  or  it  is  not.  If  it  is  a wise 
policy,  we  should  embark  upon  it,  but  if  it  is  an  evil,  the  way  to 
avert  it  is  certainly  not  to  take  the  first  long  step  from  economic 
rectitude  that  lies  in  its  direction.  Some  very  vicious  policies 
have  threatened  our  country  and  have  been  made  dangerous  by 
our  taking  the  first  step  as  a compromise.  That  is  true  with 
reference  to  inflation.  It  is  emphatically  true  with  reference 
to  the  coinage  of  silver,  when  the  reason  was  given  for  taking 
repeated  steps  in  coining  or  buying  that  metal  that  they  were 
necessary  to  avert  free  coinage,  until  finally  we  had  thousands 
of  tons  of  silver  stored  in  the  Treasury,  and  it  was  only  by  an 
almost  unexampled  act  of  Presidential  heroism  that  we  did  not 
go  to  the  silver  standard  by  the  mere  force  of  gravitation. 

You  do  not  propose  to  have  the  Government  take  the  railroads 
by  this  bill,  but  you  propose  to  have  it  take  away  from  the  con- 
trol of  the  owners  their  only  beneficial  interest,  which  is  the 
rate.  It  is  said  by  the  advocates  of  the  bill,  for  purposes  of 
prejudice  or  extenuation,  that  the  securities  of  our  railroads 
are  bountifully  watered.  If  true,  that  would  be  a relevant  mat- 
ter, perhaps,  for  the  courts  to  consider  when  a shipper  claimed 
that  an  unreasonable  rate  had  been  exacted.  Certainly  it  fur- 
nishes no  argument  for  the  passage  of  this  bill.  It  must  be 
considered  as  a matter  of  denunciation  and  indulged  in  for 
6512 


\ 


19 


the  purpose  of  exciting  prejudice.  But  let  us  see  what  the  fact 
is.  There  is  no  higher  authority  upon  the  subject  of  railroads 
in  the  United  States  that  President  Hadley,  of  Yale,  who  first 
won  distinction  as  professor  of  railroad  economics  in  that  uni- 
versity. 

Last  year  he  made  the  statement  in  a letter  published  in  the 
Boston  Transcript — and  the  letter  was  by  no  means  generally  in 
favor  of  our  railroads — that  the  railroads  of  the  country  could 
not  be  duplicated  for  $50,000  a mile.  In  other  words,  counting 
their  franchises  as  of  no  value,  the  material  and  labor  necessary 
to  duplicate  them  would  be  in  the  aggregate  not  less  than  ten 
and  a half  or  eleven  billion  dollars,  which  is  substantially  the 
amount  of  their  outstanding  capitalization.  Probably  it  would 
cost  the  Government,  if  it  undertook  to  * duplicate  the  work, 
twice  that  amount,  and  that  would  not  include  the  enormous 
sums  that  have  been  thrown  away  in  reconstruction,  where,  in 
order  to  do  away  with  curves  and  grades,  much  original  con- 
struction has  been  abandoned.  If  you  count  the  franchises  as 
nothing — and  your  railroads  can  not  be  duplicated  to-day  by 
private  enterprise  for  less  than  substantially  the  amount  of  the 
capitalization — how  can  you  say  that  there  is  aqy  material 
amount  of  water  in  their  securities?  In  the  capitalization  of 
some  railroads  the  nominal  capital  is  not  equal  to  the  amount 
actually  paid  in.  In  some  cases  the  stock  was  sold  by  the  rail- 
road at  a high  premium  and  the  premium  went  into  its  treas- 
ury. Undoubtedly  there  are  cases  where  railroads  were  built 
over  a new  country  at  great  risk,  where  business  was  not  de- 
veloped, and  the  men  furnishing  the  capital  received  stock 
bonuses.  These  bonuses  were  offered  openly  in  order  to  attract 
capital  necessary  for  the  work.  I fancy  you  will  hardly  deny 
that  the  investor  was  fairly  entitled  to  a chance  for  extra  profit 
to  pay  him  for  the  risk  he  assumed.  If  the  railroad  should 
turn  out  to  be  unprofitable,  he  might  lose  his  entire  investment 
The  man  who  paid  $2  an  acre  for  his  land  saw  it  increase,  in 
many  cases,  by  the  building  of  the  railroad,  by  the  jeopardy  of 
the  money  of  other  men,  to  $100  an  acre.  Are  we  to  call  the 
$98  water?  Gentlemen  are  not  heard  to  advance  that  theory. 

Mr.  MANN.  Will  the  gentleman  permit  me  a suggestion  in 
that  line? 

Mr.  McCALL.  With  pleasure. 

Mr.  MANN.  The  total  capitalization  of  the  railroads  of  the 
United  States  is  about  thirteen  billion  dollars. 

Mr.  McCALL.  I think  the  total  outstanding  capitalization  is 
less  than  twelve  billions. 

Mr.  MANN.  The  total  amount  of  stocks  and  bonds  is  some- 
thing over  thirteen  billion  dollars,  with  a railroad  mileage  of 
over  two  hundred  thousand  miles.  In  Great  Britain,  together 
with  continental  countries,  the  total  amount  of  mileage  is  con- 
siderably less  than  two  hundred  thousand  miles,  with  a total 
capitalization  of  over  eighteen  billion  dollars,  so  that  the 
amount  of  capital  we  have  invested  per  mile  in  this  country  is 
far  less  than  the  amount  of  capital  per  mile  invested  in  the 
roads  owned  by  the  European  governments  or  by  private  owner- 
ship there,  notwithstanding  the  prevalent  opinion  that  every- 
thing here  is  watered  and  everything  there  is  not  watered. 

Mr.  McCALL.  I am  very  much  obliged  to  the  gentleman  for 
his  interruption,  and  it  only  adds  another  excellent  authority  to 
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the  authority  whom  I have  already  quoted,  President  Hadley, 
of  Yale  University. 

Then  it  is  said  that  money  bonuses  and  land  grants  were  given 
to  encourage  railroad  building,  and  in  listening  to  the  very  elo- 
quent speech  of  the  gentleman  from  Michigan  on  Tuesday  I at 
first  thought  he  was  entirely  overlooking  the  fact  that  there 
had  been  any  material  investment  of  private  capital.  That 
bonuses  were  given  does  not  now  impress  me  as  of  the  greatest 
consequence,  because  the  Government,  or  the  people  who  gave 
them,  did  so  from  the  standpoint  of  their  own  self-interest,  and 
in  many  cases  they  profited  richly  by  the  building  of  the  rail- 
road ; but  I think  it  fair  for  gentlemen  to  correct  the  order  in 
which  they  mention  the  sources  of  supply  of  capital  to  build 
railroads.  I believe T am  entirely  within  the  truth  when  I say 
your  bonuses  and  grants  from  national  and  local  governments 
and  individuals  would  not  all  combined  pay  5 per  cent  interest 
for  a single  year  upon  our  railroad  capitalization. 

There  is  no  species  of  property  that  deserves  the  grateful  con- 
sideration of  Congress  more  than  the  railroad  property,  for  it 
has  conferred  incalculable  benefits  upon  the  country.  Without 
the  railroads  our  population  would  be  confined  to  the  seaboard 
and  the  water  courses.  Three-fourths  of  the  country  would  be 
unsettled  and  uncivilized.  But  largely  as  a result  of  daring 
investments  that  have  been  made  we  have  to-day,  with  one- 
twentieth  of  the  population  of  the  globe,  a valuation  of  more 
than  a hundred  billions,  or  one-third  of  the  entire  capital  of  the 
globe. 

Mr.  SIBLEY.  Will  the  gentleman  pardon  an  interruption? 
The  gentleman  speaks  of  one-twentieth  population.  I think  it 
is  important  that  you  also  show  that  with  one-twentieth  popu- 
lation wre  are  furnishing  one-third,  or  thirty-three  and  a third 
per  cent,  in  round  numbers,  of  the  entire  food  products  of  the 
world. 

Mr.  McCALL.  Yes. 

The  great  factor  in  the  advancement  of  America  has  been  the 
free  play  given  for  individual  action.  If  at  the  outset  we  had 
tied  up  the  energies  of  men  by  statutes  and  removed  the  spur 
of  ambition  from  the  inventor,  the  railroad  builder,  and  the 
man  of  business,  the  progress  of  our  country  would  have  been 
far  less  marked  than  it  has  been  during  the  last  century,  and 
the  progress  that  the  rest  of  mankind  has  gained  under  the  in- 
fluence of  our  example  would  also  have  been  less.  The  Amer- 
ican railroad  managers,  not  through  altruism  or  philanthropy, 
but  by  their  individual  genius,  called  into  play  by  the  benefi- 
cent influence  of  our  free  institutions,  have  been  working  out 
the  destiny  of  the  American  people.  They  have  helped  power- 
fully to  mold  a vast  and  naturally  diverse  continent  into  one 
people.  They  have,  in  a double  sense,  bound  together  the  most 
remote  parts  of  the  country  by  cords  of  steel.  The  have  inter- 
woven our  interests  and  our  hearts  inextricably  with  the  meshes 
of  the  iron  net.  And  if  they  are  to  receive  your  denunciation 
intead  of  your  gratitude,  then  there  is  no  species  of  property 
in  the  country  which  may  not  be  plundered  by  law.  There  is 
a prescription  that  will  almost  infallibly  work  in  forcing 
through  such  legislation.  Fiercely  denounce  some  Wall  street 
magnate  by  name  and  then  add  some  lurid  declamation  about 
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insurance,  and  you  could  successfully  rob  any  business  in  the 
country  except  farming,  and  if  farmers  were  not  so  numerous 
they  too  would  not  escape. 

Mr.  ADAMSON.  Will  the  gentleman  allow  a question? 

Mr.  McCALL.  Certainly. 

Mr.  ADAMSON.  Do  you  suppose  the  law  would  allow  any 
farmer  in  this  country  who  would  be  guilty  of  such  an  action  to 
escape  the  penitentiary? 

Mr.  McCALL.  I trust  the  gentleman  did  not  think  I was  re- 
flecting upon  the  farmer. 

Mr.  ADAMSON.  You  are  claiming  immunity  for  the  others. 

Mr.  McCALL.  I was  applying  your  prescription,  that  was 

all. 

Mr.  ADAMSON.  My  prescription  simply  requires  those  who 
are  powerful  to  do  right — to  practice  equality  and  justice — as 
well  as  the  other  classes  of  the  people. 

Mr.  McCALL.  That  is  a magnificent  generality  upon  which 
you  could  put  any  proposition  through  in  legislation. 

Mr.  ADAMSON.  We  have  not  indulged  in  generalities,  but 
we  have  provided  some  magnificent  specialties  in  this  bill. 

Mr.  McCALL.  We  often  make  a mistake,  I venture  to  say, 
in  thinking  that  there  is  a genuine  public  opinion.  Quite  too 
often  here  we  think  there  is  a raging  popular  sentiment  when 
it  is  only  that  we  have  a tendency  of  blood  to  our  heads.  The 
people  do  not  send  us  here  to  enact  every  popular  noise  into  law. 
[Applause.]  We  often  make  a mistake,  I venture  to  say. 

We  have  seen,  then,  two  clearly  defined  systems  of  rate  mak- 
ing— that  of  France  and  Germany  and  other  foreign  countries 
and  that  of  America.  We  have  seen  that  the  foreign  system, 
although  put  in  force  in  countries  having  dense  populations  and 
with 'a  relatively  low  scale  of  wages  has  led  to  high  rates  and 
restricted  trade,  and  that  any  extensive  commerce  between  por- 
tions of  these  countries  remote  from  each  other  has  only  been 
made  possible  by  rivers  and  canals.  On  the  other  hand,  we  have 
seen  the  American  system  put  in  force  over  a sparsely  settled 
area  and,  although  the  wage  scale  has  been  more  than  twice 
that  abroad,  the  average  freight  rate  has  been  only  half  as  great, 
and  we  have  seen  the  most  remote  parts  of  a continent  trading 
with  each  other,  the  whole  country  made  a common  market  and 
a commerce  pouring  over  our  railroads  not  far  in  volume  from 
the  combined  railroad  commerce  of  all  the  rest  of  the  world,  an 
interstate  commerce  so  vast  as  to  make  even  our  prodigious  for- 
eign commerce  seem  insignificant.  And  you  are  proposing  by 
this  bill  to  strike  down  the  American  system  under  which  these 
marvels  have  been  produced  and  substitute  the  foreign  system. 
Measuring  my  word  and  speaking  to  the  exact  relation  be- 
tween the  system  you  are  overturning  and  the  system  you  are 
adopting  I say  that  I believe  you  are  about  to  vote  for  the  most 
un-American  proposition  ever  submitted  to  an  American  Con- 
gress. The  fundamental  question  here,  stripped  entirely  of 
sentiment,  is  whether  we  shall  continue  the  American  system, 
where  the  rates  have  inevitably  sprung  from  the  action  of 
economic  forces,  or  whether  we  shall  adopt  the  expensive  for- 
eign system  of  government-made  rates  and  have  the  management 
of  your  railroads  thrown  into  politics,  as  if  there  were  not  al- 
ready enough  in  this  country  upon  which  the  politician  can  lay 
his  felonious  paws.  [Applause.] 

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The  Government  may,  if  it  desires,  provide  and  operate  at  its 
own  cost  highways  over  which  its  citizens  may  travel  and  move 
their  property,  but  it  has  not  been  a commonly  exercised  func- 
tion to  require  citizens,  at  their  own  cost,  to  carry  the  persons 
and  property  of  other  citizens.  It  certainly  has  been  a no  less 
common  function  of  government  to  fix  the  price  of  bread  and 
to  establish  public  granaries  for  corn.  And  if  either  of  these 
functions  must  be  exercised,  it  should  be  under  the  most  careful 
safeguards  or  it  will  be  attended  with  grave  danger.  Burke 
says  that  certain  of  the  Pope’s  territories,  being  obliged  to  fur- 
nish Rome  and  the  State  granaries  with  corn,  were  utterly 
ruined,  and  then  he  adds : “ Having  looked  to  the  Government 
for  bread,  they  on  the  first  scarcity  will  turn  and  bite  the  hand 
that  fed  them.  To  avoid  that  evil,  Government  will  redouble 
the  causes  of  it.”  The  philosophy  of  Burke’s  illustration  ap- 
plies to  the  pending  bill.  It  is  not  the  least  weighty  of  the 
objections  against  it  that  it  will  tend  to  corrupt  the  American 
people.  It  implies  no  defamation,  but  only  a slight  knowledge 
of  human  nature  to  see  that  you  are  holding  out  to  them  a 
temptation  dangerous  to  their  morality  and  dangerous  also  to 
the  rights  of  private  property.  Your  railroad  securities  are 
held  in  a comparatively  small  portion  of  the  country,  and  the 
great  mass  of  people  scattered  over  the  rest  of  the  country,  with 
little  interest  of  ownership,  will  be  interested  in  cheaper  trans- 
portation. Will  not  the  pressure  of  the  greater  mass  of  what 
you  call  public  opinion  have  the  same  effect  upon  the  national 
Commission  as  it  has  had  upon  State  commissions,  against 
whose  rates  the  courts  have  felt  compelled  to  intervene?  If  so, 
you  must  remember  that  the  constitutional  safeguards  against 
the  National  Government  are  fewer  and  less  effective  than 
against  the  State  governments.' 

Can  anyone  justly  say,  in  view  of  the  history  of  our  rail- 
roads and  the  splendid  service  they  are  rendering,  that  the  time 
has  arrived  for  our  Government  to  embark  upon  so  venturesome 
a policy?  The  great  organizations  of  labor,  with  their  admirable 
sense  of  self-preservation,  clearly  see  the  danger. 

Your  bill  pretends  to  grant  a judicial  review  of  orders  of  the 
Commission  fixing  rates,  but  it  adopts  the  device  of  permitting 
this  to  the  railroad  on  the  peril  of  its  life.  If  the  railroad  avails 
Itself  of  your  inestimable  privilege  of  review  and  the  courts 
decide  in  its  favor,  it  costs  the  Government  nothing  and  the  rail- 
road has  the  enjoyment  of  its  former  rate;  but  if,  as  has  hap- 
pened in  two  cases  out  of  thirty-four,  the  court  sustains  the 
Commission,  the  railroad,  if  it  has  not  adopted  the  Commission’s 
rate,  which  may  prove  to  be  confiscatory,  must  pay  a penalty  to 
the  Government  of  $5,000  per  day,  multiplying  each  day  by  the 
number  of  times  the  rate  is  enforced,  a penalty  that  in  some 
cases  would  mount  into  the  millions.  Do  you  call  this  a fair 
judicial  review?  Would  there  be  any  taint  of  a “ square  deal  ” 
in  saying  to  a man  whom  a police  justice  had  fined,  “ Yes ; the 
justice  may  be  wrong,  as  justices  usually  are,  and  you  may 
appeal ; but  if  the  higher  court  happens  to  sustain  the  justice, 
you  shall  lose  your  life?” 

Mr.  ADAMSON.  May  I interrupt  the  gentleman? 

Mr.  McCALL.  Certainly. 

Mr.  ADAMSON.  Does  not  the  gentleman  think  that  the 
carriers  can  avoid  all  such  risks  by  putting  in  force  the  rates 
fixed  while  they  litigate  to  set  them  aside? 

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Mr.  McCALL.  Certainly ; and  that  illustrates  the  point. 
You  are  trying  to  coerce  the  carrier  on  penalty  of  his  life. 

Mr.  ADAMSON.  But  if  a man  is  going  to  the  penitentiary  he 
may  appeal  without  asking  a supersedeas,  then  if  he  does  not 
win  he  saves  that  much  time. 

Mr.  McCALL.  There  is  no  such  proceeding  in  the  bill,  as  I 
understand  it. 

Mr.  BARTLETT.  The  gentleman  certainly  does  not  under- 
stand that  there  is  no  provision  in  this  bill  permitting  an  inter- 
locutory order  by  the  court  to  stay  the  enforcement  of  the 
order  until  it  can  be  adjudicated?  This  bill  provides  for  the 
interlocutory  order. 

Mr.  McCALL.  I think  it  is  doubtful  if  that  is  in.  Evidently 
the  gentleman’s  opinion  is  different  from  the  opinion  of  his  col- 
league who  just  interrupted  me.  I understood  him  to  say  the 
railroad  might  yield  and  adopt  the  rate. 

Mr.  ADAMSON.  I suggested  that  he  might  litigate  the  rate 
without  asking  a supersedeas. 

Mr.  BARTLETT.  I started  to  say  it  is  true  that  it  says 
unless  it  is  stopped  by  an  injunction.  I apprehend  that  the 
gentleman  must  know  and  believe  as  a lawyer  that  it  is  not  in 
the  power  of  Congress  to  prevent  a railroad  from  appealing  to 
the  court  and  the  processes  of  the  court  until  the  questions  have 
been  decided. 

Mr.  McCALL.  In  my  opinion  it  is  entirely  clear  that  that  is 
the  purpose  of  the  bill. 

Mr.  BARTLETT.  I wish  I could  make  it  accomplish  that. 

Mr.  McCALL.  There  may  be  evidence  of  a sense  of  justice 
in  all  this,  but,  if  so,  it  is  the  sense  of  justice  not  of  man,  but 
of  the  hyena  and  the  bear.  The  philosophy  of  it  is  that  you 
may  run  fof  your  life,  but  you  are  eaten  if  you  stand,  and  you 
will  be  eaten  if  you  are  caught.  Compared  with  the  scheme 
of  this  bill  there  is  a certain  nobility  in  the  policy  of  govern- 
ment ownership,  wrong  as  I believe  that  policy  to  be.  You 
carve  our  magnificent  railroad  system  not  as  a feast  fit  for  the 
gods,  but  hew  it  as  a carcass  fit  for  hounds. 

We  pass  laws  here  with  an  easy  optimism  and  a profound 
faith  that,  so  great  are  the  American  people,  their  prosperity 
is  proof  even  against  vicious  government.  And  so  the  two 
great  parties,  in  playing  the  game  of  politics,  sometimes  vie 
with  each  other  in  pandering  to  the  popular  passion  of  the 
hour,  and  court  the  roar  of  the  galleries  rather  than  history’s 
approved  voice.  Undoubtedly  the  splendid  strength  and  youth 
of  the  American  people  are  well-nigh  unconquerable,  but  no 
state  was  ever  yet  so  great  that  a persistence  in  evil  courses 
could  not  lay  it  low.  We  may  presume  too  far.  If  we  are 
guilty  of  reckless  and  impulsive  action  here  we  may  wreck 
the  nation.  If  you  will  pardon  an  old  fable : As  the  boy 
Phaeton,  driving  the  horses  of  the  sun,  but  lacking  Apollo’s 
dattting  glance  and  unerring  touch  of  rein,  did  not  follow  the 
safe  middle  course,  and  thus  wrought  havoc  to  both  the  earth 
and  sky ; so  by  impulse  and  unsteadiness  in  driving  this 
Washington  chariot  of  ours,  now  steering  too  high  and  now 
too  low,  we  may  put  our  American  constellations  to  flight,  dry 
up  the  courses  of  our  iron  rivers,  and  make  of  our  fertile 
prairies  the  sands  of  another  Libya.  [Applause.] 

In  some  remarks  which  I submitted  on  this  floor  one  year 
ago  upon  a similar  measure  I dwelt  upon  what  I regard  as  much 
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D970 


more  important  aspects  of  the  proposed  legislation  than  its 
economic  features.  I shall  not  repeat  what  I then  said,  but 
content  myself  with  the  barest  reference.  This  bill  makes 
an  enormous  contribution  to  what  I regard  as  an  evil  of  the 
times — the  steady  encroachment  of  the  legislature  upon  liberty. 
Our  boasted  American  freedom  is  being  construed  to  mean  the 
power  to  weld  statutory  fetters  upon  the  individual — to  impose 
upon  our  own  selves  a species  of  slavery.  We  sometimes  say 
that  we  are  restraining  the  individual  in  the  interest  of  the 
other  eighty  millions,  and  we  thus  take  away  the  rights  of  every 
individual  man  in  the  whole  mass  and  sacrifice  liberty  to  a mere 
abstraction.  This  is  a condition  abhorrent  to  the  idea  of  the 
founders  of  the  Republic,  who  knew  that  men  had  suffered  as 
greatly  from  too  much  as  from  too  little  government ; that  they 
had  thousands  of  times  been  punished  by  law  for  actions  essen- 
tially virtuous,  and  so,  taking  care  to  safeguard  that  high  kind 
of  liberty  which  would  protect  the  individual  against  the 
encroachments  of  the  Government,  they  set  our  State  upon  the 
middle  course  that  lies  between  anarchy  and  despotism.  This 
tendency  to  too  much  government  is  not  confined  to  one  party, 
for  I have  observed  that  gentlemen  who  delight  most  in  quoting 
the  immortal  Jefferson  are  sometimes  the  fondest  of  imposing 
these  fetters  upon  the  people.  The  aggregate  achievement  of 
individuals  has  made  America.  To  my  mind,  American  free- 
dom is  individual  freedom.  Give  men  as  much  liberty  as  you 
can  consistently  with  order  and  under  the  stimulus  of  freedom 
and  order  and  the  right  to  enjoy  what  they  accomplish  and 
what  they  gain  this  nation  will  keep  magnificently  moving  on. 

And  then  there  is  centralization.  At  the  rate  we  are  now 
moving  it  will  not  be  long  before  we  regulate  everything  and 
everybody  from  Washington.  You  can  not  govern  the  whole 
universe  from  a single  point  and  have  a shred  of  liberty  survive. 

Instead  of  chasing  every  will-o’-the-wisp  that  shows  itself 
upon  somebody’s  horizon,  let  us  then  guide  ourselves  by  the 
great  first  principles  of  the  American  Government.  And  to 
return  to  this  bill,  you  will  have,  in  my  opinion,  a better 
railroad  system  and  a better  people  if  you  safeguard  in  the 
courts  the  fundamental  right  of  every  man  to  a reasonable 
and  equal  rate  and  permit  those  rates  to  respond,  as  they  have 
hitherto,  to  economic  forces.  In  the  conditions  existing  to-day 
I believe  the  people  would  shrink  from  governmental  ownership, 
because  of  the  expense  and  danger  incident  to  governmental 
management.  But  that  expense  and  that  danger  would  cer- 
tainly not  be  less  when  you  make  our  Interstate  Commission 
general  managers  of  railroads  built  and  owned  and  operated  at 
the  risk  of  private  capital.  [Loud  applause.] 

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